The funding winners were chosen based on course completion rates and value for money, the Tertiary Education Commission has said.

The wananga's successful tender included funding for about 60 foundation-level student spots in Manawatu, with a further 88 spots at private training establishments funded by the TEC. UCOL has since decided to cut jobs and courses to make up for the shortfall.

Palmerston North Mayor Jono Naylor said it was disappointing to see a small slice - amounting to less than 3 per cent of the total funding available - going to Manawatu.

"I think it is a retrograde step to be taking funding away from provincial New Zealand," he said. "I would imagine it is a similar phenomenon for the Eastern Institute of Technology in Hawke's Bay and for the Western Institute of Technology in New Plymouth.

I think some of this foundation course funding could have gone to provincial New Zealand . . . this is going to further challenge our provinces. People in the provinces need to be work-ready as much as the people in the city."

John Fiso, president of the New Zealand Association of Private Training Establishment Providers, said the funding spread had been uneven. "I'm not going to dispute the fact that the wananga does some excellent work, but to receive 57 per cent of all the available funding, is this fair?"

Mr Fiso said it was disappointing that the allocation of funding has largely restricted learners to the public sector and NZAPEP would be discussing it further with the Government.

A Tertiary Education Commission spokeswoman said Te Wananga had received 57 per cent of the available SAC funding as one of the largest providers of foundation-level education in New Zealand.

"Tertiary Education Commission decision-making focused on ensuring value for money. In particular, providers were asked to demonstrate and evidence their ability to engage learners in need of foundation skills, and their success with these learners, including successful progression to higher levels of education or to employment.

"The proposed cost of provision was also considered, as was regional and national need," the spokeswoman said.